Net operating cycle vs operating cycle? net, between, question, decrease, difference

nixie24

Hey guys, I can't seem to find what the difference is between the two. I had a question asking if days in payables increased, what would happen. I choose decrease in operating cycle but the answer was decrease in net operating cycle.

Thxn!

cyber21

Operating cycle = Days of inventory on hand + Days of sales outstanding

Net operating cycle = Days of inventory on hand + Days of sales outstanding - Number of days payables

Net operating cycle is also called cash conversion cycle.

ramzes

If anyone is having a hard time remembering the formula for the CCC (i did) I used the acronym RIP to remember it lol. Receivables + Inventory - Payables.

scr879

oh okay unaware of the synonym thnx